OLG audit finds misuse of corporate credit cards, 46 per cent raises, and no comprehensive business case for modernization plans

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Furniture. Travel. Sky-high executive pay.

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A long-awaited government audit found a number of red flags in the Ontario Lottery and Gaming Corp executive suit, ranging from corporate credit card misuse to compensation practices consistent with those of other public servants.

The report also found that OLG’s plan to funnel more money to the provincial coffers by privatizing casinos was plagued with delays, overly optimistic profit forecasts and a lack of a “broad business case”.

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The audit, which was conducted by an interior department of the government and not the Office of the Independent Auditor General, prevents sharp conclusions from being drawn about OLG’s performance, but it is serious. Questions about the value offered by the agency to taxpayers.

From 2015 to 2018, some OLG executives achieved a growth of between 16 and 46 percent, far higher than the three to 10 percent increase in other state-owned corporations, the audit found.

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As of 2018, then-CEO Stephen Rigby was earning $765,000 (he made $797,000 the previous year before leaving OLG).

The audit found that in 2019, total executive compensation at OLG was $11.1 million, compared to $7.2 million, $6.1 million and $5.2 million at Metrolinx, LCBO and the Workplace Safety and Insurance Board, respectively.

In 2019, shortly after the government began auditing, OLG faced a report by Rigby in the Toronto Sun of excessive spending on office renovations.

The auditors sampled about $260,000 of spending on credit cards across the board and found that 29 percent of that was on items like furniture and travel and didn’t comply with OLG’s corporate credit card policy—shopping through another. Should have been done. Audit did not draw any conclusions about Rigby personally.

OLG Spokesperson Tony Bitonti told the Star in an email that the credit card transactions noted in the audit were “found to be legitimate work-related expenses,” and that the corporation implemented recommendations by auditors to tighten controls in that area. Is.

Bitonti also said that the current salary ranges were approved by OLG’s board and government in 2018 and that “a third-party review has confirmed that these wage ranges fall within market rates for the broader public sector.”

He said that executive base pay has been withheld since 2018 and the agency is already working on the recommendations of the audit.

“OLG welcomes independent reviews of its business that contribute to better governance and increased accountability,” said Bitonti.

The publication of the audit comes more than two years after the government launched a comprehensive investigation into OLG, a Crown corporation that runs lotteries and oversees casinos.

The report said that OLG privatized casinos between 2016 and 2019 and saw an 82 percent reduction in staff, while the number of executives increased by 36 percent.

Last year, OLG came under fire for continuing to pay executive bonuses as the COVID-19 shutdown ravaged the casino business and laid off thousands of private sector gambling workers. However, the time period after 2019 was not included in the audit.

The investigation also raised concerns about OLG’s 2012 “modernisation” plan to enter into agreements with private operators to run existing casinos and build new ones.

It concluded that the process was marked by delays and that OLG management had “leaned in favor of optimism such as best-case or ideal-case scenarios.”

OLG also failed to develop a “comprehensive business case” for modernization, when the Auditor General stated that there was a need for In a 2014 report.

OLG initially promised that modernization would benefit the province an additional $1.3 billion each year until 2017-18, but this was later revised to $889 million in 2021-22. Before the pandemic, it gave the province about $2.5 billion a year in benefits.

Canadian Gaming Association president and CEO Paul Burns said the audit showed the modernization process was too “complicated and rigorous”. It made it difficult for private operators to bid on contracts and damage the business case for those winning casino rights, he said, leading to less revenue for the province.

“Under the new leadership, OLG is implementing a new strategic plan that will provide additional growth and continuous improvement,” he said. Duncan Hanne, a former banking executive, took over as CEO of OLG last October.

“Our government supports OLG’s commitment to improving its operations, increasing accountability and transparency, and delivering value to the province of Ontario by acting on audit recommendations,” said Finance Ministry spokeswoman Emily Hogevin.

The two phases of the audit were completed in June and December of 2020 but were posted online earlier this month.

CD
Christine Dobie is a Toronto-based business reporter for Star. Follow him on Twitter: @christinedobby
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